Shares of Zip Co Ltd (ZIP.AU) plummeted 5.12% in intraday trading on Wednesday, as investors reacted to news of an unfavorable court decision in a trademark infringement case against the company.

The sharp decline came after the Federal Court of Australia ruled on a trademark infringement claim brought by Firstmac Limited against Zip Co. While the specific details of the court's decision were not immediately available, the ruling appears to have gone against Zip Co, prompting concern among shareholders about potential financial and operational impacts on the company.

In response to the court's decision, Zip Co announced its intention to lodge an application for special leave to appeal the Federal Court trademark decision. This move indicates that the company is prepared to continue its legal battle, though the outcome remains uncertain. The market's negative reaction suggests that investors are wary of the potential risks and costs associated with prolonged litigation, as well as any possible restrictions on Zip Co's use of its branding or trademarks in Australia.